Regulatory Risk: I already mentioned this in my webpage rather oftenly and a several investors whom I have contact with confirm this assumption. According to them, there is too much interference in sectors that are directly connected to the companies listed at Ibov. No news here either. Change in contracts for electricity companies, interference in the fuel price and in Petrobras (now grade CCC+ on the Buenos Aires branch) are only part of the greater amount, as well as changes in taxation for foreign investment in fixed income and short positions on the dollar futures market. Locals feel the same about it.

It’s The economy, stupid!: Despite the performance of labor market with low unemployment, GDP has disappointed on every release (no surprise to me, as I mentioned in this article (currently in Portuguese only), where I went wrong about the Taper). There are no IPI (Industrialized Goods Tax) relief enough to boost the economy to a state of "bubble" and furthermore, high inflation in the middle of this year, coupled with several protests around the country sank the confidence in the economy. There’s not enough World Cups to save us now.

Poor Performance: Well, this argument is retro-fed. The poor performance of Ibov reduces the demand for it so long positions are no longer a reality. Despite the record volume growth this year, it all revolved around the 120,000 traditionally active players. I.e., we use 20 percent of the total "population" of investors and we are just over 10 percent of the target set by the BM&FBovespa of 5,000,000 total investors. And since we rarely see on today's TV News that stocks are considered good investment, no one senses the return of that “floating portion” of the investors.

OGX: Obviously, the whole blame does not entirely lie with Dr. Xavier and his X-Companies, but Brazilian Stock Market does seem riskier because of them. Professional investors were already kind of vaccinated against the EBX virus, but the timing of non-professional investors and an insane expectation of recovery led to the large series of losses.

Butters: The government communications through its great finance minister (whose name in Portuguese seems a lot like butter) and the lack of a concrete direction for the actions of economic stimulus also largely affected the notion of risk, which repealed investors from Bovespa. An economist President is not helping either, along with a non-independent Central Bank.

USA: Many Brazilians love to blame all on the “gringos”. American this, American that, some of us will say! Financial Market was no different. Many argued that the lack of definition during the year about the Taper increased volatility and reduced appetite for higher risk premium. "NOOOT" as my son and Borat would say. The U.S. stocks are among the best performances of the year. Previously, the scenario was "Good Data, Bad for Stocks" and finally with the Taper, now we are back to the regularly scheduled program of "Good Data, Good for Stocks" . So, it's not the US fault, brazoocas! (We call ourselves this way, sometimes).

Interest Rates: We produce the Global Real Interest Rates Ranking and Brazil is strongly back to the first place as the best interest payer. Migration to fixed income? No, we keep putting our money on saving accounts, which are so Brazilian as Carnaval and Feijoada that we no longer consider this as a fixed income investment per se. Wrong bets on the path of interest rates in Brazil and in the U.S. took several investment funds by "surprise" in the middle of the year and fixed income was another “ugly duckling” along with stocks.

Finally, we show below the annual performance in local currency of stock exchanges around the world and we are, up to the date indicated below, the worst performers. No surprise again, it was a bad year for the country, but there is a wonder why we fail to “surf the wave of developed countries“ considering signs of economic recovery.

We would put aside the misshapen figures in Venezuela and Argentina, where there is a huge difficulty in believing in data, especially considering the dire state of both countries, but we include both cases to show that stocks became virtually the only option of investment for them.

In a "normal" scenario, Japan and its stimulus plan would be the first place and our almost neighbor Chile makes us company downstairs.

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